Alfred W. Harre v. Arthur G. Muegler ( 1997 )

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
No. 96-2572
___________
Alfred W. Harre, *
*
Plaintiff/Appellee, *
*
Bernice E. Harre, *
*
Plaintiff, *
*
David Bening, *
*
Plaintiff/Appellee, *
* Appeal from the United States
v. * District Court for the
* Eastern District of Missouri.
Arthur G. Muegler, *
* (PUBLISHED)
Defendant/Appellant. *
___________
Submitted: April 17, 1997
Filed: May 23, 2997
___________
Before BOWMAN, HANSEN, and MURPHY, Circuit Judges.
___________
PER CURIAM.
In 1990, Alfred and Bernice Harre and David Bening sued Arthur
Muegler, alleging claims of fraudulent and negligent misrepresentation.
During a long discovery period, Muegler failed to provide requested
documents, to respond to interrogatories, or to answer deposition
questions, asserting his fifth amendment privilege. As a sanction for his
noncompliance with discovery
requests and orders, the district court1 barred him from presenting
undisclosed evidence or testifying at trial. He nevertheless prevailed
with the jury, but the judgment was overturned because of erroneous jury
instructions. See Bening v. Muegler, 67 F.3d 691 (8th Cir. 1995). In the
second trial, a jury awarded Bening and Alfred Harre $260,000 each for
compensatory and punitive damages. Muegler appeals from the adverse
judgment, contesting the sanctions imposed by the court, its evidentiary
rulings, the jury instructions, and the sufficiency of the evidence. We
affirm.
The evidence presented at trial is recited here in the light most
favorable to the verdict. Newhouse v. McCormick & Co., Inc., 110 F.3d 635,
637 (8th Cir. 1997). Alfred Harre and Bening are Illinois farmers who
invested in Concepts Communications and a related limited partnership in
1988 and 1989. James Grice, who was Concepts' president, and Muegler, who
was Concepts’ attorney throughout most of this period, had organized and
conducted several promotional meetings that Harre and Bening attended.
Muegler introduced Grice to the potential investors as a computer and
communications expert, and Grice introduced Muegler as the former counsel
of Emerson Electric Company. Muegler represented that the companies were
involved in the telecommunications business and that money invested in them
would be used to purchase telephone equipment and run the businesses.
Harre and Bening each invested over $80,000, three fourths of it in a
limited partnership which Muegler stated had a contract to provide beeper
and pager service to the state of Illinois. There was no such contract,
however, and the limited partnership never operated as a business. The
funds invested by Harre and Bening were not used to purchase telephone
equipment, and there was evidence that the $120,000 supposedly invested in
the partnership was used instead to purchase a
1
The Honorable Charles A. Shaw, United States District Judge
for the Eastern District of Missouri.
-2-
certificate of deposit to secure a $120,000 loan for Concepts. An amount
almost equal to that loan amount was spent by Concepts to open a gay bar
in St. Louis.
In December 1989, police raided Concepts’ offices and arrested Grice,
who as a convicted felon was prohibited from selling securities.2 There
was evidence that Muegler knew Grice was a convicted felon, and it was
revealed after the raid that Concepts did not own its telephone equipment
but was leasing it. The lessor took control, and Concepts was left without
any assets. The Harres and Bening then sued Muegler, alleging that they
had lost the total value of their investments because of Muegler’s improper
conduct.
During discovery, Muegler failed to produce requested pre-trial
documentary evidence, to answer interrogatories, or to identify his
witnesses. He ignored orders of the district court to compel, and asserted
the fifth amendment at his deposition. Plaintiffs were therefore unable
to discover his evidence. As a sanction for noncompliance, the court
prevented him from presenting any evidence he had not turned over during
discovery and from testifying. Shortly before trial, Muegler indicated
that documentary evidence would be made available for review and that he
would waive his fifth amendment privilege. The district court found that
Muegler’s offer of discovery had occurred too late in the course of trial
preparation and that permitting undiscovered evidence at trial would
prejudice the plaintiffs. On appeal, Muegler argues that the district
court should not have imposed those sanctions.
A careful review of the record reveals an almost complete failure to
give discovery on the part of Muegler. Muegler
2
Grice had been convicted in 1980 and 1981 of several counts
of theft in Texas but was later paroled.
-3-
disregarded court orders to answer interrogatories or produce documents,
and he refused to answer any questions in his deposition other than to give
his name. He claimed that he did not have necessary information to comply
with discovery requests because documents and files had been seized in the
police raid and were in the possession of Illinois prosecutors who were
pursuing criminal charges against Grice and him.3 The docket sheet from
the Illinois criminal case indicates, however, that the state had complied
with Muegler's discovery request for those documents almost two years
before he admitted they were available and before he supplemented his
answers to interrogatories. Only after the district court imposed
sanctions and trial was soon to begin did Muegler indicate a willingness
to produce the documents, identify his witnesses, and waive his fifth
amendment privilege.
Although Muegler now claims the district court should be reversed,
he still has not specified what particular evidence was excluded, its
substance, or how he was prejudiced by its exclusion. See Strong v.
Mercantile Trust Co., N.A., 816 F.2d 429, 432 (8th Cir. 1987) (offer of
proof is necessary for appellate court to determine whether exclusion of
evidence was prejudicial). Under the unusual circumstances presented, the
imposition of sanctions preventing Muegler from introducing undisclosed
evidence was not an abuse of discretion and did not result in a
constitutional violation. See Boardman v. National Med. Enters., 106 F.3d
840,
3
Both Grice and Muegler were indicted in Illinois on charges
of the unlawful sale of securities and theft, and Grice was
indicted on the additional offense of deceptive practice. In 1993,
Grice was convicted of seven counts of the unlawful sale of
securities, two counts of theft, and one count of the offense of
deceptive practice, but the charges against Muegler were dismissed
after the original verdict in this case. The Illinois criminal
charges were reinstated after the judgment in his favor was
reversed.
-4-
844 (8th Cir. 1997); see also SEC v. Graystone Nash, Inc., 25 F.3d 187,
191-92 (3d Cir. 1994).
Muegler makes a number of other claims of error which he asserts
individually and cumulatively resulted in constitutional violations and had
an adverse effect on the jury. He argues that the district court abused
its discretion in several evidentiary rulings and violated the Constitution
by admitting irrelevant, incompetent, and unduly prejudicial evidence while
excluding other relevant evidence. He also argues there was not enough
evidence to support the giving of several jury instructions, that they
misstated the law and contained errors permitting the jury to return a
verdict outside the law, and that the punitive damages instructions were
unconstitutional. Finally, he contends that the plaintiffs did not state
a claim of negligent misrepresentation in their complaint, establish their
claims as a matter of law, or prove damages. Harre and Bening respond that
there was overwhelming evidence to prove their claims and damages, the
district court did not abuse its discretion in its evidentiary rulings, and
the jury instructions properly stated the law.
After thoroughly examining the record and considering Muegler's
arguments, we conclude that the claims of error are without merit. There
was substantial admissible evidence to support the giving of all the jury
instructions and the resulting verdict, and the district court did not
abuse its discretion in its evidentiary rulings. The jury instructions
taken as a whole adequately and fairly stated the law, and Muegler has not
shown he was prejudiced by any error or that his constitutional rights were
violated.
For these reasons, the judgment of the district court is affirmed.
-5-
A true copy.
Attest:
CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.
-6-